Analysis And Interpretation Of Mahindra Comviva's Financial Analysis Of Financial Performance

Chapter 5: Analysis and Interpretation
Ratio Analysis of Mahindra Comviva’s Competitors

Interpretation
1. CURRENT RATIO • The ideal Current Ratio for a company is 2:1 which shows short-term solvency position of the company and availability of current assets for every one rupee of current liability. As current ratio above the ideal ratio represents not efficient usage of current assets.
• Thus, it is analysed OnMobile have better current ratio of 1.74:1 in the year 2014 as compared to IMImobile.
2. DEBT TO EQUITY RATIO • Debt to equity Ratio represents long-term solvency position that indicates relation between the amount of assets financed by creditors and the amount of assets financed by stockholders. Lower Ratio is considerable

NET PROFIT MARGIN • It is the ratio of net profit (after tax) divided by net sales. It determines the financial performance of the company. It should be as maximum as possible for a company.
• Thus, IMIMobile have better and maximum net profit margin of 9.029 in the year 2014.

9. WORKING CAPITAL RATIO • It is the ratio of current assets over current liabilities. It determines the financial health of a company to pay off its short term obligations.
• Thus, IMIMobile have better and maximum working capital ratio of 4.22:1 in the year 2014.

10. CASH TURNOVER RATIO • It is the ratio between cash equivalent + marketable securities to current liabilities. It is the most conservative liquid ratio
• Thus, IMIMobile have better and maximum cash turnover ratio of 0.72 in the year 2014.
Thus, these are various financial ratios showcasing financial performance of competitors of Mahindra Comviva which are helpful in setting benchmark position for company.

Chapter 6: Findings and Suggestions
Findings
The study conducted on Financial System of Telecommunication Industry of Mahindra Comviva shows the analysis of financial performance within the following context. Major findings

Mahindra Comviva has recently changed its method of revenue recognition i.e. a shift from Completed Service Contract Method to Proportionate Completion Method as it measures revenue proportionately by reference to the performance of each act.
3. For Software Company a new guideline or a standard is defined in US GAAP as well INDIAN GAAP: - Multiple Element Arrangements to allocate revenue among accounting periods when certain elements are delivered over more than one period.
4. Difference between US GAAP and INDIAN GAAP while allocating consideration for revenue recognition in Multiple Element Arrangements is that US GAAP identifies according to Vendor specific Objective Evidence of Fair Value whereas INDIAN GAAP identifies according to Relative Fair Value.
5. As competitors of Mahindra Comviva, IMImobile has a better financial performance than OnMobile which is judged through the results of various financial ratios. Thus, this justify that relatively IMImobile sets a benchmark position or goal standards for the company for future prospects and better management.
6. Financial Ratios unfolds the strengths and weaknesses of the company. It provides quantifiable metrics which is beneficial for comparative analysis.